Investors devoured debt funds hand over fist during the first seven months of the current fiscal.
According to the Association of Mutual Funds in India (AMFI), mutual funds raked in a whopping Rs 75,000 crore under debt funds during April-October against Rs 67,650 crore mobilised during the entire 2000-01.
So much has been the skew that debt accounted for 70 per cent of the total assets under the management of the sector during the seven months, while equity accounted for the rest.
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Of the investment portfolio of Rs 94,571 crore, investments in debt funds aggregated Rs 64,898 crore, while equity investment totalled Rs 29,673 crore.
This is a major reversal compared with what happened in 2000. As of March 31, 2000, assets in equity investment stood at Rs 60,404 crore compared with 52,601 crore in debt.
However, all has not been rosy for debt funds. During April-October, outflows were higher at Rs 62,439 crore compared with Rs 57,589 crore for the entire 2000-01.
According to B S Pandit, executive director, Unit Trust of India, investment in debt funds during the seven months, though higher compared to the full year of 2000-01, is short term in nature.
This time around, investors parked their funds for a specific purpose and withdrew it once their purpose was solved. Whereas, in the previous year investment in debt was for a longer term.
Gilts and money markets funds, which are basically short term in nature, were the most preferred during the seven months. Inflows into these funds were higher at Rs 49,165 crore compared with outflows of Rs 44,045 crore. During 2000-01, inflows were at Rs 41,675 crore and outflow of Rs 36,246 crore.
Income funds inflows stood at Rs 25,907 crore and outflows were at Rs 18,414 crore during the period. In the previous full year, inflows were at Rs 25,974 crore and outflow of Rs 21,343 crore.
The uncertainty in equity markets still seems to be playing on the investors' psyche as inflows into growth and balanced funds was weak during the seven months. Inflows for both the funds stood at Rs 1,349 crore compared with outflows of Rs 6,412 crore. In 2000-01, inflows in growth and balanced funds were higher at Rs 25,746 crore and outflows worked out to Rs 21,379 crore.